FlyDubai Rescue Latest; Trump Calls on Powell to Resign from Fed Board

0:02 Bloomberg Audio Studios.

0:04 Podcasts.

0:05 Radio.

0:06 News.

0:10 Good morning, I'm Karen Moscow.

0:12 And I'm Alexis Christophorus. Here are the stories we're following today.

0:16 Well, Alexis, we want to begin in the skies.

0:18 Investigators are trying to understand why a co-pilot stabbed his captain on a.

0:21 Fly-to-by flight to Israel.

0:24 The flight, carrying 174 people, made an emergency landing in Saudi Arabia after the attack unfolded on board. We get more from Bloomberg Global Aviation Editor Benedict Campbell.

0:35 There is an axe that is stored generally in cockpits for safety measures. So we think that might have been the weapon. That was one of the questions yesterday that came up. What kind of weapon might the assailant have used? And what would that tell us about possible screening or lack thereof? So we think it was an axe that was used here. We also know what then happened. The pilot seemed to have had The power, the final sort of courage to open the door and let others in.

1:02 Passengers rushed to the front of the plane. A reserve crew that happened to be on the plane also came to the front and they managed to stabilize the aircraft. This could obviously have ended in dramatic catastrophe.

1:13 And it didn't.

1:14 Everybody got off the plane safely.

1:15 And that's Bloomberg's Benedict Hamill who says the plane plunged more than 14,000 feet in less than 30 seconds before the crew was able to stabilize the aircraft.

1:24 Turning to the nation's capital now and President Trump once again calling for Jay Powell to resign from the Federal Reserve's Board of Governors. Trump blamed the former Fed chair for a headquarters renovation whose cost has risen to $ 2. 4 billion.

1:38 It's horrible what they've done.

1:39 He's incompetent.

1:41 And the man that's incompetent should not be sitting on the Federal Reserve Board.

1:44 And I get I'm sure that Todd and everybody's going to be looking.

1:48 Because the report was a pretty bad report.

1:51 The report said they did they did a bad job.

1:53 They didn't know what they were doing.

1:55 The president's comments come after the Federal Reserve's internal watchdog found no evidence of criminal wrongdoing in the central bank's renovation of its Washington headquarters. We get more from Bloomberg Economics and Fed reporter Mike McKee.

2:07 They did not identify administrative misconduct during our evaluation. In other words, nobody did anything criminally wrong or to benefit themselves. They just did not manage this very well. And the bottom line question here is, why did the Fed go ahead with this? Because according to the inspector general, they were not competent to do so, or at least according to the report here.

2:31 Bloomberg's Mike McKee says the Fed will implement the watchdog's recommendations, including engaging an independent auditor to scrutinize all awarded costs to date.

2:40 Well, we now turn to the markets, Alexis, where we begin the final quarter of the year. The S & P 500 coming off a 2% gain in the third quarter. The benchmark index is up almost 12% for the year. Mark Pinto is head of America's equities at Janus Henderson Group.

2:55 If you look forward, the market's trading at 19 times earnings. And, you know, I remember many years ago we talked about the inverse and the market PE essentially being the inverse of the 10-year bond rate. We are there today. So in my view, that's not an uneven backdrop.

3:10 Janice Henderson Group's Mark Pinto. By the way, the top performing stock in the third quarter was not an AI name.

3:17 It was Moderna.

3:18 The biotech company jumped 175%. It was spurred ahead by positive data behind a melanoma drug. It's been developing in partnership with Merck.

3:27 And Karen, stock futures aren't mixed this morning. Micron Technology shares falling despite the chip company giving a sales forecast for the current quarter that beat estimates. That is due to the AI build-out fueling unprecedented demand. Jake Silverman covers Micron for Bloomberg.

3:43 Micron has become kind of a really important story because it's ubiquitous within electronics, the products that they sell. And within AI, they sell a number of different products. I think for a while, people were really focused on high bandwidth memory, but now we're just really focused on the entire product portfolio because pricing has increased so much. It's becoming an increasing percentage of not only enterprise and IT, CapEx, but also, importantly, AI and hyperscaler CapEx as well.

4:12 That's Bloomberg's Jake Silverman. Shares of Micron down about three quarters of a percent in the early going.

4:18 As for the bond market, Alexis, treasury yields are continuing to rise to levels we haven't seen in decades. And Bloomberg's John Tucker joins us with the very latest.

4:26 John, good morning.

4:27 Good morning, Karen.

4:28 The U.S.

4:28 Benchmark, this is the 10-year treasury this morning, breached a level last seen almost a quarter of a century ago. That was after the dot-com bubble burst. The jump in yields taking place against a backdrop of stubborn inflation, fiscal concerns and resilient growth, which is inflationary, as well as a borrowing binge to build out the AI infrastructure that's adding to the flood of debt hitting the markets. Terry Wiseman at Macquarie says the pressure is actually growing on Washington.

4:57 I would submit that I think the biggest political pressure on this government and this U.S. government right now is not the price of oil. Yes, it hurts CPI, of course. The bigger problem, I think, is the yield story.

5:08 And market participants expect rates to go higher. More than half of the 173 respondents to a markets poll survey. predict U.S. 30-year yields will hit 6% by the end of this year. In New York, I'm John Tucker, Bloomberg Radio.

5:22 All right, thanks, John. AI was also in focus in Los Angeles at Bloomberg Screen Time. The event gathers the moguls, celebrities, and entrepreneurs defining the next phase of pop culture. Bloomberg's Lucas Shaw spoke to director, actor, writer, and producer Ben Affleck, who says that he is more worried about the impact of artificial intelligence on children and society than he is about the filmmaking industry.

5:44 When I worry about AI, I worry about my kids in school. I worry about the 30% rise in the number of A's given out at colleges over the last three years. I worry about learned helplessness. I worry about responsible use. I don't worry about Skynet, and I don't think that it's going to take over this business in any meaningful way. I think it's going to be additive.

6:09 Ben Affleck's AI company Interpositive was founded as a tool to aid filmmakers in their post-production process. It was sold to Netflix in March of this year. You can catch the full conversation on the Bloomberg Video Hub at Bloomberg.com and on the Bloomberg Business app.

6:23 Well, also at Bloomberg Screen Time this year, Alexis, Netflix co-CEO Ted Sarandos, he spoke with Bloomberg's Lucas Shaw and said the U.S.

6:31 Streaming giant is not growing as quickly as he would like.

6:34 Overall, we're not growing as fast as I want us to. and we're working on making that move faster. We are, though, also doing things that create a lot of headwind to that number, meaning when we do live programming on Netflix, which is a relatively new thing, we spend about 5% of our content budget on live events. They generate about 1%.

6:55 Of our watching.

6:56 And Netflix co-CEO Ted Sarandos speaking with Bloomberg's Lucas Shaw from.

7:00 The Bloomberg Screen Time Conference.

7:02 Netflix's engagement grew 2% in its latest period, even as revenue increased at a double-digit pace in every region. To boost the growth, Netflix is expanding beyond its core business of films and TV series, with about 5% of its $ 20 billion content budget going toward live programming.

7:21 Coming up on 609 on Wall Street, time for a look at some of the other stories making news in New York and around the world. For that, we're joined by Bloomberg's Michael Barr. Good morning, Michael.

7:29 Good morning, Alexis. It was a testy debate between Democrat Javier Becerra and Republican Steve Hilton, who are vying to replace California Governor Gavin Newsom. The candidates sparred on a range of topics, including immigration. Becerra, a former congressman and health and human services secretary under the Biden administration on CNN.

7:48 It is good to have a regulated system of immigrants to come into our country, including California. And that's something that I have always pushed for. It is bad when immigrants are being separated from their children. It's bad when immigrants are being killed indiscriminately. It's bad when U.S. citizens are dying through these immigration raids. So let's have regulation of our borders.

8:10 Hilton, the former Fox News host, responded.

8:13 When you were HHS secretary, you were responsible for 479,000 unaccompanied migrant children and for their welfare in camps that you ran. You sent them because you dismantled the vetting that should have made sure that they were with a safe, protective family or sponsor.

8:35 Other topics addressed included affordability and how they would address the impact of AI. New York Governor Kathy Hochul says Cornell University has agreed to open an independent investigation into how the school handled what a former student alleges was a gang rape at a frat house in 2024. investigation of what exactly transpired in terms of the civil actions and what the role Cornell University played, what they did, what they didn't do. That student filed a complaint, but no charges were brought, and she is now suing. Tennessee officials have been unable to put Krista Pike to death for a 1995 murder after administering two doses of a lethal drug. Tennessee Governor Bill Lee last night halted the

9:18 remaining scheduled execution for the rest of the year and ordered an outside investigation. Pike's attorneys say she was taken by ambulance from the prison. Global News 24 hours a day and whenever you want it with Bloomberg News Now. I'm Michael Barr and this is Bloomberg, Alexis.

9:33 Thanks, Michael.

9:36 Time now for our Bloomberg Sports Update, and for that, we bring in John Stashower.

9:41 Thanks, Karen.

9:41 The baseball playoffs, three teams won in advance of the next round. The Yankees with another round of the Red Sox, this one 9-2. The Yankees will now take on Tampa Bay. The White Sox won a playoff series for the first time since 2005. A 7-3 win at Houston. Next stop is Cleveland. San Diego beat the Cubs 4-1. The Padres will now play Milwaukee. The Phillies will now play the Red Sox. rallied late. They beat the Braves 4-3 in 10 innings. They'll play game three tonight. Enrique Ogunbowale scored an WNBA playoff record 45 points. Detroit won in overtime.

10:10 That's your Bloomberg Sports Update.

10:13 Stay with us. More from Bloomberg Daybreak coming up after this. Coast to coast on Bloomberg Radio. Nationwide on Sirius XM.

10:25 And around the world on Bloomberg.com and the Bloomberg Business App.

10:29 This is Bloomberg Daybreak.

10:32 Good morning. I'm Karen Moscow alongside Alexis Christophorus. A day after that near catastrophic attack on a pilot of a fly Dubai aircraft headed to Israel, fresh details are emerging about the struggle to stabilize the plane and rescue the 174 passengers on board. A co-pilot apparently stabbed his colleague using an axe before being overwhelmed by passengers.

10:53 Alma Getali was one of those passengers.

10:56 It took three or four minutes until we took over the airplane. And immediately the third pilot managed to balance the aircraft and we were looking for someplace to land.

11:12 And we want to get more in the story with Global Aviation Editor Benedict Camel.

11:16 Benedict, good morning.

11:17 So this was a surprisingly calm and measured account of what must have been chaos and really absolutely frightening.

11:23 What do we know about this incident?

11:25 Yes, good morning. So, it did turn into a lucky escape, as it were, in the end, because what started as really a mayhem kind of situation, we had one of the pilots attacking his colleague in the cockpit. We think it was an axe that was used. There is a a sort of an emergency axe that is stored in the cockpit, and he used this to attack his colleague.

11:50 This colleague then managed to open the door, even though he was badly injured, and that allowed passengers who raced forward to come to his aid and to essentially defuse the situation and stabilize the plane, which at that point had started a very steep descent. So, a really lucky turn of events, resolve from passengers, quick reaction from and everyone in the end managed to get down safely. They landed in Saudi Arabia and were later transferred back home to Tel Aviv.

12:19 So the big question here is a motive. Have we heard anything about a motive?

12:24 We have not. Obviously, there is the suspicion of terrorism, but again, it's too soon to say. We don't know the identity of the co-pilot, of the attacker. We know that the person in the cockpit who was attacked, the other pilot, He is Indian, but we don't know the identity of the other person. This matters because that might give us some clues as to the possible motive, as to whether other people behind him. Is this a sort of 9-11 type attack whereby a plane is taken over, is hijacked essentially, and then used as a weapon? Or was this a lone wolf, a suicidal mission? It does revive sort of fears of, should we say, crew-related sabotage.

13:09 And we've seen some of that in the past. There was the incident last year with Air India, where there's a suspected tampering in the cockpit. And there have been other cases. So, again, what exactly the motive is, is too soon to say. But that is certainly one line of inquiry.

13:27 Yeah, and really, how do you protect anyone from this kind of scenario? FlyDubai, they suspended flights to and from Israel, of course, but are other airlines going to follow suit? Is that just one way to do it, by stopping the flights?

13:40 Well, that's obviously an extreme measure to take. And this was a very popular route. And a lot of Israelis flew to Dubai for business or for pleasure. And that route has for now been suspended. Whether it'll come up again in what form, again, is too soon to say. It does raise the question of... The safety of the Middle East in terms of a travel destination, there had been a lot of concerns over the last couple of months since the Iran war started, whether Dubai, Qatar, Abu Dhabi, those are popular hubs, whether those would be able to retain their status as just that, as big aviation hubs.

14:19 They had come back, but now this incident will raise some serious questions for a lot of travelers, whether they want to transit through the area or land in Dubai. So, it's too soon to say what kind of impact that might have on the numbers. But again, something that we'll have to watch closely.

14:38 This is Bloomberg Daybreak, your morning podcast on the stories making news from Wall Street to Washington and beyond.

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15:24 I'm Karen Moscow.

15:25 And I'm Alexis Christophorus. Join us again tomorrow morning for all the news you need to start your day, right here on Bloomberg Daybreak.